October 21, 2008
Intrinergy, a Leading Renewable Energy Company, Closes on Debt Financing on a EUR 34 ($47) Million Project in Belgium
Intrinergy, a U.S.-based renewable energy company, and Shanks Group plc, a leading European waste management company, today announced closing EUR 34 million ($47 million) in debt financing from NORD/LB, one of Germany's leading renewable energy banks, to begin construction of Intrinergy VARE Holdings, a biomass energy project located in Belgium.
The project, which has already received its permits, includes the greenfield development of a combined-heat-and-power (CHP) plant and a wood pellet manufacturing facility. The CHP plant, fueled by renewable biomass supplied by local Shanks subsidiary Foronex, will generate up to 12 MW of process steam and almost 5 MW of electrical power. The process steam and a portion of the electricity will power the co-located wood pellet manufacturing operation which will produce 50,000 tons per year of pellets, a fuel source used throughout the region as a substitute for heating oil and natural gas in residential and commercial buildings. The balance of renewable electricity will be sold under a long-term power purchase agreement and will generate Green Certificates, the equivalent of Renewable Energy Certificates (REC) used in the U.S. and ROCs in the U.K.
The project finance package structured by Intrinergy and NORD/LB finances approximately 80% of the project with senior, secured non-recourse debt. Intrinergy and Shanks have invested the balance of the capital and will operate the project as a joint venture.
"At a time when the credit markets are tightening, we're delighted to be able to close on this transaction and extend Intrinergy's renewable energy franchise across Europe," said John Keppler, CEO of Intrinergy. "I believe this deal speaks to the power of Intrinergy's ability to create investment grade opportunities in energy and the environment. We're thrilled to partner with NORD/LB and Shanks on a project that will be an essential part of the global climate change solution."
The joint venture between Shanks and Intrinergy provides a secure, long-term supply of biomass feedstock for the project. Shanks, through its Foronex subsidiary, will manage the biomass feedstock consumed by the project and together with Intrinergy will jointly market the wood pellets. Biomass, such as sawdust and forestry residues, serves a dual role as both the energy source and the raw material used to manufacture the wood pellets.
"Combining Shanks' biomass resource expertise with Intrinergy's CHP experience and wood pellet manufacturing and distribution expertise creates a robust business model that can potentially be used on future projects," said Tom Drury, CEO of Shanks Group. Intrinergy currently operates a CHP and wood pellet manufacturing facility in Straubing, Germany.
"Amid a challenging lending environment, a well-structured transaction and a strong management team gave us confidence in the overall credit attributes for this investment," said Heiko Ludwig, the Head of Energy - Europe of NORD/LB. "In addition to our confidence in the parties involved and the solid business model and financial structure we have developed together, the renewable energy focus helps us reinforce NORD/LB's commitment to the environment and sustainability."
Intrinergy VARE Holdings has awarded the engineer-procure-construct (EPC) contract to a consortium consisting of Areva Bioenergy GmbH of Germany, a subsidiary of Areva Bioenergies SAS, and KEM SA of Denmark. Under this contract, Areva and KEM will provide turnkey design, procurement, and construction services. The contractors have been mobilized and onsite work will commence over the next few months.
Hunton & Williams LLP served as project counsel to the transaction, led by John Deacon in London and Herve Cogels in Brussels.
Founded in 2004, Intrinergy specializes in building, financing, owning, and operating renewable energy facilities. Intrinergy converts cost-competitive biomass into green electricity and thermal energy (steam) for industrial customers, helping to reduce their exposure to fossil fuel price volatility and carbon emissions. Today, Intrinergy operates facilities in Mississippi, Ohio, Germany, and the Dominican Republic; new facilities now in permitting and construction include projects located in Belgium, Connecticut, Delaware, and Pennsylvania. Collectively, these projects represent over $250 million in capital investment. For more information, visit www.Intrinergy.com.
Shanks Group is Europe's largest listed independent waste solutions company operating in the United Kingdom, Belgium, the Netherlands and Canada. It operates in the following key segments: solid waste; landfill and power; hazardous waste; organic treatment; and Public Finance Initiative (PFI) contracts. It provides its customers with sustainable solutions to their waste and environmental obligations.
Shanks Group employs over 4,000 people and has an overall recycling and recovery rate of 58%, led by The Netherlands at 83%.
In the financial year ending 31 March 2008, Shanks Group's revenues increased 11% to GBP 564m and PBT (pre-exceptionals) rose by 11% to GBP 44.8m.
Shanks Group is a FTSE 250 company, listed on the London Stock Exchange.
NORD/LB is the largest bank in Northern Germany with total assets of more than EUR 200 billion and ranks among the top ten banks in Germany. It is the state bank (Landesbank) for the federal states of Lower Saxony and Saxony Anhalt, and the federal state of Bremen (through its almost wholly owned subsidiary, Bremer Landesbank). NORD/LB has close ties to 75 saving banks (Sparkassen) in the three states. NORD/LB has branches and subsidiaries in the world's major financial centers. Just like ships, aircraft, logistics infrastructure, and commercial real estate financing, renewable energy financing belongs to NORD/LB's growing business segments with a volume of more than 3 billion Euros. The bank is rated A by Standard & Poor's. For more information, visit www.nordlb.com.